Chapter 09
Problem 01
Input Area:
Average expected gross annual yield 6.00%
Interest on securities issued 4.00%
Expected default rate 3.00%
Investment banking fees 0.50%
Liquidity facility 0.50%
Credit guarantee 0.60%
Output Area:
Sum of expected costs 8.60%
Estimated residual income -2.60%
Chapter 09
Problem 02
Input Area:
Amount of loan 10,250,000
Term of loan (months) 9
Interest rate for loan without credit guarantee 6.50%
Interest rate for loan with credit guarantee 6.00%
Cost of standby credit guarantee $10,000.00
Output Area:
Interest cost ($) for loan without credit guarantee $499,687.50
Interest cost ($) for loan with credit guarantee $461,250.00
Interest savings from credit guarantee $38,437.50
Chapter 09
Problem 03
Input Area:
Face Value of GNMA securities Tranche Face Value
Annual
Coupon
Rates
A25,000,000 4.50%
B25,000,000 5.00%
C25,000,000 5.50%
D25,000,000 6.00%
Part C– Mortgage pmt and prepmt cash inflow 5,000,000
Output Area:
Part B–Coupon pmts for first month Tranche Payments
A93,750.00
B104,166.67
C114,583.33
D125,000.00
Part C
Total interest paid 437,500.00
Amount applied to principal 4,562,500.00